Going Virtual

When I first entered the working world, having a business meant that your company had an office in a big building with furniture, a receptionist & other employees, a fax machine, a phone system, lots of filing cabinets, fancy stationery, you get the picture: a real business = physical location. That was then.

In 2009, its possible to have a thriving and successful business without a substantive physical presence. We now have the technological tools that enable us to work from anywhere, but even more importantly, people are willing to accept a "virtual business" as a service provider, partner, or customer. With a good website and competent outsourcing partners, its very possible to have a one person company that has the capabilities and appearance of a much larger company. Even in traditional heavy manufacturing industries, new competitors like Fisker Automotive are moving towards a decentralized, virtual business model.

Should you run a virtual business? The answer will depend on the type of business, the talent that is needed, and a host of other factors. Some of the benefits of going virtual include:

• Lower overhead costs: offices, utilities, furniture, etc are all expensive. For most service businesses, facilities is the biggest expense after payroll so being able to minimize or eliminate it this expense a big boost to the bottom line or if you're just starting out, it will reduce your startup expenses.
• Flexibility: without a physical office, your team is free to work from anywhere, to collaborate as & when needed. You are also not tied down to a physical location which could constrain your growth.
• Environmental: no commuting and no wasted office space (empty at night & weekends) are just the start of the reduction in your carbon footprint.
• Productivity: eliminating commuting time, unnecessary meetings, physical distractions at the office, and other wasted time could result in more time for productive work vs. just putting in face time at the office.
• People: eliminating physical constraints allows you to hire from a much broader pool of qualified individuals and many people will consider it a huge benefit to be able to work remotely on their own schedule.

There are of course downsides, the most common being:

• Perception: despite changing attitudes, some people still expect to do business with companies in tall downtown office buildings. One entrepreneur told me that his office address in San Francisco's financial district helped him close a deal with a large East Coast company that wouldn't have done business with a smaller startup. He was in executive office space but we won't tell anyone that. ;)
• People: Some people just work better and need to collaborate in a physical setting. Others need the discipline of a 9 to 5 office location to keep them productive. Some end up spending all their time (including nights and weekends) working while others spend all their time on personal chores, Facebook, and Twitter. Its critical to find the right people to make a virtual company successful.

I would say that the benefits for a typical service or Web 2.0 business still outweigh the drawbacks. Some tips to increase your chances of succeeding:

• Set expectations up front about working hours, deadlines, work load, etc.
• Be very selective when hiring people, you have to trust them to do their work unsupervised, to motivate themselves, and to be very technically literate.
• Have daily communication with your staff or outsourced service providers, between phone, email, and IM, there's really no excuse not to check in regularly.
• Physically get together on a routine basis for meetings, happy hours, celebratory lunches, and so forth to create that human connection. We aren't robots and most people do work better remotely when they have a face to put to a name.
• Invest in technology: from your website, to computers, to cellphones, to systems, make sure that you invest in the best tools to create a seamless work environment that offers the productivity of a traditional office.

If you decide to take the leap and create a virtual company or convert your current business into a virtual business model, drop me a line and let me know how it went!